Yorkshire banks case summary

[Amethyst]

case summary sent to court and claimant (but often received by neither)

Thanks to Sue for getting a hold of it.

[Amethyst]

Re: Yorkshire banks case summary

some paras which the above case summary refers to.

The application of Regulation 6(2)
47. I can state my opinion much more briefly on the second main issue in the appeal,
that is the application of Regulation 6(2), properly construed, to the facts. Charges for
unauthorised overdrafts are monetary consideration for the package of banking services
supplied to personal current account customers. They are an important part of the banks’
charging structure, amounting to over 30 per cent of their revenue stream from all
personal current account customers. The facts that the charges are contingent, and that the
majority of customers do not incur them, are irrelevant. On the view that I take of the
construction of Regulation 6(2), the fairness of the charges would be exempt from review
in point of appropriateness under Regulation 6(2)(b) even if fewer customers paid them,
and they formed a smaller part of the banks’ revenue stream. Even if the Court of
Appeal’s interpretation had been correct, I do not see how it could have come to the
conclusion that charges amounting to over 30 per cent of the revenue stream were (para
111) “not part of the core or essential bargain.”



89. For these reasons I have formed the conclusion that the Relevant Charges are, as
the Banks submit, charges that they require their customers to agree to pay as part of the
price or remuneration for the package of services that they agree to supply in exchange.

104. In accordance with general European legal principle, article 4(2) and regulation
6(2) are as exceptions to be construed narrowly. Nevertheless, the concepts of “price or
remuneration” must, I think, be capable in principle of covering, under a banking
contract, an agreement to make a payment in a particular event. The language of
regulation 6(2)(b) is on its face therefore capable of covering a customer’s commitment,
under the package contracts put before the House, to pay the Relevant Charges in the
specified events. There is no reason why a customer should not be given free services in
some circumstances, but, as a quid pro quo, be expected to pay for them in others.


Counters to some parts of those ???

74. I wish to express my admiration for the detailed and perceptive analysis of
Andrew Smith J, although I do not share all the conclusions that he reached. He examined
each of the Relevant Charges and the circumstances in which they fell to be paid. He
concluded that it was impossible to say that each charge was given in exchange for the
event that triggered it. I agree with that conclusion. It accords, of course, with the primary
way in which the Banks put their case. The same conclusion would, I think, have been
reached by a reasonably informed customer who applied his mind to the question. In
each instance the Judge identified aspects of the provisions for payment of the Relevant
Charges that would be anomalous if they were intended to be paid in exchange for the
service to which they related. I will take one of the charges made by Barclays to illustrate
such anomalies. A ‘Paid Referral Fee’ is charged when the Bank honours a cheque,
standing order or direct debit in circumstances where the account is overdrawn without
prior arrangement. The fee is not charged per transaction but at £30 per day. But the fee
is only charged on a maximum of three days per month. A customer would not conclude
that the fee was charged in exchange for the transaction or transactions concluded on the
days when the charges were made but that any other similar transactions in the course of
the month were provided free.

75. I agree with Andrew Smith J that a careful analysis of the transactions giving rise
to the obligation to pay the Relevant Charges leads to the conclusion that they are not the
prices paid in exchange for the transactions in question.


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61. Mr Sumption submitted that the difference between the “excluded term” and the
“excluded assessment” constructions was “a distraction from the real issues”. It is
certainly a distraction from the narrow issue that the parties are now agreed is before the
court. But it is only because the “excluded assessment” construction has prevailed that the
issue has been narrowed from that in the Agreed Statement of Facts and Issue. Had the
“excluded term” construction prevailed, a finding in favour of the Banks that the Relevant
Terms were included within the meaning of the word “price” in Regulation 6(2) would
have precluded any challenge to those terms on the ground of fairness. As it is, if the
Banks succeed on the narrow issue, this will not close the door on the OFT’s
investigations and may well not resolve the myriad cases that are currently stayed in
which customers have challenged Relevant Charges.